TKO Group Holdings Inc (TKO, Financial) disclosed its financial results for the third quarter ended September 30, 2023, on November 7, 2023. The company reported a substantial 32% increase in revenue, which amounted to $449.1 million, driven by contributions from both UFC and WWE. However, net income experienced a sharp decline to $22.0 million, down from $129.7 million in the previous year, primarily due to heightened operating expenses.
Financial Performance Overview
TKO's revenue boost was attributed to a $56.8 million increase at UFC and a $51.6 million contribution from WWE for the period post the September 12, 2023, acquisition. Despite the revenue growth, net income suffered a decrease, largely due to a $136.7 million rise in selling, general, and administrative expenses, which included costs related to the TKO transaction and restructuring activities.
Segment Performance
UFC's revenue climbed by 17% to $397.5 million, with media rights and content fees, live events revenue, and sponsorship revenue all showing increases. Adjusted EBITDA for UFC also improved by 17%, reaching $238.3 million. WWE's revenue for the short period from September 12 to September 30 was $51.6 million, contributing $22.0 million to Adjusted EBITDA.
Operational and Strategic Developments
TKO's CEO, Ariel Emanuel, highlighted the company's focus on integration and strategy execution since the launch of TKO, including identifying cost synergies and expanding international market presence. Emanuel remains optimistic about TKO's growth potential and shareholder value creation.
Capital and Cash Flow
Cash flows from operating activities decreased to $67.0 million, a $71.3 million drop from the previous year, mainly due to the lower net income. Free Cash Flow also saw a decrease to $63.6 million. The company's gross debt stood at $2.773 billion as of September 30, 2023.
Corporate Developments
The TKO transaction, which combined UFC and WWE, incurred $67.5 million in merger and acquisition-related costs for the quarter. Additionally, the company implemented a cost reduction program to realize synergies and integrate operations, resulting in $31.6 million of restructuring, severance, and impairment costs.
Investor and Shareholder Information
TKO announced a special one-time cash dividend of $3.86 per share of Class A common stock, totaling approximately $321 million, paid on September 29, 2023, to shareholders of record as of September 22, 2023.
TKO Group Holdings Inc (TKO, Financial) continues to navigate the complexities of its recent merger while achieving revenue growth. The company's ability to manage increased operating expenses and realize the full potential of its strategic initiatives will be critical in the coming quarters. Investors and stakeholders will be closely monitoring TKO's progress as it seeks to solidify its position in the sports and entertainment industry.
Explore the complete 8-K earnings release (here) from TKO Group Holdings Inc for further details.
